Question

Using the worksheet you completed in Part 1, revise the given year end information with the following values and then answer the questions below:

Select year end company accounts and additional information:
Account Name Account Balance Account Name Account Balance
Supplies $13,500 Service revenue $146,200
Interest receivable 0 Interest revenue 0
Salaries payable 0 Supplies expense 0
Deferred revenue 8,100 Salaries expense 65,300
1. Supplies remaining at the end of the year. $ 5,100
2. Services remaining to be provided to customers who paid in advance. 2,500
3. Employees are owed additional salaries at the end of the year. 6,200
4. A note receivable was accepted on March 31. 6,600 Interest rate on note 8 %
Required: Prepare the adjusting journal entries based on the results of your revised spreadsheet.

Answer 1

Adjusting Journal Entries:

1. Debit Supplies Expense $8,400

Credit Supplies $8,400

To adjust for supplies expenses for the year.

2. Debit Deferred Revenue $5,600

Credit Service Revenue $5,600

To adjust for services provided to customers.

3. Debit Salaries Expense $6,200

Credit Salaries Payable $6,200

To adjust for unpaid salaries at the end of the year.

4. Debit Interest Receivable $396

Credit Interest Revenue $396

To adjust for unreceived interest due for 9 months.

Step-by-step explanation:

a) Data and Calculations:

Supplies = $13,500

Service revenue = $151,800 ($146,200 + 5,600)

Interest receivable = $396

Interest revenue = $396

Salaries payable = $6,200

Supplies expense = $8,400 ($13,500 - $5,100)

Deferred revenue = 2,500 ($8,100 - 5,600)

Salaries expense = 71,500 (65,300 + 6,200)

b) Interest Revenue is computed at 8% of $6,600 for 9 months only. This results to $396 ($6,600 * 8% * 9/12).